Digital music sales account for 20 percent of the Australian music market (up from zero in 2003) and will rocket to more than 50 percent by 2013, making legally downloaded music Australia's dominant medium for music sales in terms of both revenue and volume, IbisWorld says.

"While many recording artists are embracing the digital revolution sweeping the music industry, their record labels are looking at tough times ahead with poor profits and no sure strategy to counter the rising popularity of downloads and ringtones over the humble CD."

Despite publicity and record label animosity over music piracy, IbisWorld Australia GM Robert Bryant believes "illegal downloads will reach a tipping point, beyond which further growth will be difficult.

"As online music becomes more readily available, and more affordable, we'll see an increasing number of music fans legitimately downloading," he says.
"As the industry evolves, it's the record labels which are out of step with the latest technology trends."